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eResearch Corporation www.eresearch.ca
Update Report December 8, 2010 . . . . . . . . . . 3
A-CAP RESOURCES LIMITED
Recommendation Speculative Buy
Risk High
Price (December 8, 2010) A$0.41
52-Week Range A$0.48 - A$0.28
Target Price (12 Months)
A$0.80 (no change)
Shares O/S 161.8 million
Market Cap $66.3 million
Average Daily Volume 50-day: 517,400
200-day: 287,800
Year-End June 30
Salient Statistics Book Value Per Share A$0.14
Price/Book Value 2.9x
Properties Per Share A$0.10
Mo. Burn 2009A A$172,000
Mo. Burn 2010E A$245,800
Analysts Shash Patel, B.Sc., MBA
Bob Weir, B.Sc., B.Comm, CFA
eResearch Corporation
56 Temperance Street
Suite 501
Toronto, ON M5H 3V5
Telephone: 416-643-7650
Toll Free: 877-856-0765
(A$0.41; ASX:ACB)
Data Source: www.BigCharts.com
UPFRONT A-Cap Resources Limited (“A-Cap” or the “Company”) expects to release a
Bankable Feasibility Study (BFS) in late 2011 on its Letlhakane uranium
project. If the report is favourable, this could lead to production beginning in
2012 or 2013. This prospect could be a positive catalyst for the share price.
PROFILE A-Cap Resources is a junior pure-play uranium exploration company, whose
primary focus of activities is in Botswana, Africa, where the Company has 12
uranium properties, including its flagship Letlhakane uranium project.
RECOMMENDATION We recommend A-Cap Resources Limited as a Speculative Buy for long-term
risk-tolerant investors. The shares are quoted only on the Australian Stock
Exchange. Our 12-month Target Price is A$0.80.
HIGHLIGHTS Pure-play uranium exploration company;
Contains a global inferred resource of 158 million lbs of U3O8;
Near surface, low grade, high tonnage deposit;
Ranked 12th largest undeveloped uranium deposit in the world by Bank
of Montreal Capital Markets IAEA Research 2009 ;
Potential to add further resources within the Letlhakane uranium project;
Bankable Feasibility Study (BFS) and Environmental Impact Assessment (EIA) expected to be released in 2011; and
Good infrastructure in and around the Letlhakane uranium project.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 2
TARGET PRICE
The environment for junior mining companies has improved over the year. As economic conditions continue
to recover, investors will likely place higher valuations on junior mining companies such as A-Cap.
Our Target Price for A-Cap is maintained at A$0.80 per share, which is supported by our derivation of an
intrinsic value for the Company, as outlined in the “Valuation” section of this report, beginning on page 5.
RATING HISTORY
The following table summarizes the coverage provided by eResearch on the Company. All reports listed in the
table are available on the eResearch website: www.eresearch.ca
PROPERTY SUMMARY
Area Direct Mineral-
Properties (km2) Interest ization Status
Letlhakane Uranium Project 2,141 100% Uranium Advanced Exploration:
- PL's 45/2004, 138/2004, 125/2009 - Completion of EIA
and BFS expected
in Q1/2011
- Global Inferred Resource
of 158 Mlbs of U3O8
Southern Pans Project 3,000 100% Uranium Early stage exploration:
- PL’s 71/2008, 72/2008, 73/2008, - GeX Surveys to do an
74/2008, 134/2005, 135/2005, 122/2009 airborne survey
Northwest Project 1,359 100% Uranium Early stage exploration:
North Uray (PL136/2005) and - renewal applications for
South Uray (PL137/2005) these licnces due in Sept
2010 were not submitted
12 Prospecting Licenses in total about 6500
Source: Company
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 3
CORPORATE STRATEGY
A-Cap’s focus is on the development of the Letlhakane uranium project in north-eastern Botswana. Since
discovering uranium on their Letlhakane property in 2006, the Company has aggressively drilled and
delineated a JORC-compliant global resource of 158 Mlbs of U3O8. Going forward A-Cap will:
Complete an EIA and a BFS to advance its Letlhakane uranium project to production;
Continue to drill and explore the Letlhakane uranium project for resource expansion;
Expand the proprietary knowledge of its Letlhakane uranium project by using the latest exploration
technologies; and
Increase and develop management and staff as the Company transitions over the years from an explorer to
a producer.
INVESTMENT HIGHLIGHTS
1. During the latest fiscal year, A-Cap increased its JORC-compliant resource to 158 Mlbs of U3O8.
Exploration and drilling activities during the year indicate that the resource has potential to double from
the current size to more than 300 Mlbs. Currently, the Company’s Letlhakane project holds the twelfth
spot in Bank of Montreal Capital Markets’ ranking of the world’s largest undeveloped uranium deposits.
(See Properties, page 10, for further information on A-Cap’s properties.)
2. Primary ore represents 67% of the 158 Mlbs of U3O8, and its recovery will play a major role in the
development of the Letlhakane uranium project. Metallurgical test work on the Kraken and Gorgon
radiometrically-sorted primary ore indicates that 80% of the uranium can be concentrated into a sample
half the original mass with an upgrade ratio of around 50% the original grade. (See Page 12, for a
description of the three significant ore types (primary, secondary, and oxide) that occur in the Letlhakane
deposit.)
COMMENT: Improving the grade-tonnage relationship means that A-Cap will have to process
approximately half the material, which should lead to significantly lower operating costs.
NOTE: Radiometric-sorting is a technique that divides the sample into two proportions: a radioactive portion and a non-radioactive portion. Both portions are then separted into fines and coarse material.
The coarse material is passed through the sorter which accepts the radioactive portions. These portions are then re-combined with the fines to produce an upgrade composite sample suitable for leaching.
3. Metallurgical test of carbonate rich secondary ore indicate recoveries up to 80% with the use of alkaline
reagents. Metallurgical results of the remaining secondary and oxide ores suggests recoveries of up to
86% using acid leach.
COMMENT: The test work confirms the best process options for the differing ore types of the Letlhakane deposit and the suitability of all ore types for leach treatment. Further work is being
performed to finalize the leaching conditions and optimize reagent applications and will be included in the
BFS to be released in late 2011.
4. Feasibility work during the year indicated open pit mining and a heap leach processing operation as the
preferred development option. As part of this work, exploration and drilling focused on not only
expanding the size of the deposit, but also locating near-surface high-grade zones for early production.
COMMENT: The near surface nature of the resource and the Company’s ability to improve the grade- tonnage relationship for early production will have a significant affect on improving the NPV of the deposit through lowering operational costs and realizing higher cashflows earlier in the life of the mine.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 4
5. The shallow, flat-lying nature of the Letlhakane deposit will result in lower waste rock production,
improve minable ore recovery (i.e. a lower strip ratio), and make it easier and cheaper to mine. The
presence of necessary infrastructure i.e. power, rail, roads, and water within the project area will also
provide a major economic benefit.
6. All of A-Cap’s properties are in Botswana. Botswana is English-speaking in parliament and law and has
had a stable multi-party democracy since 1966. Botswana has the highest GDP per capita in Africa and is
part of the Commonwealth. The Fraser Institute Annual Survey of Mining Companies ranked Botswana
1st in Africa and 7
th in the world for mineral potential.
COMMENT: A-Cap’s invesment in Botswana is, and continues to be, an attractive investment opportunity in terms of location and mineral potential.
7. Currently, there are 439 operating nuclear reactors around the world, 59 under construction, 149 planned
reactors and 344 proposed (Source: World Nuclear Association). Global electricity demand is forecasted
to increase 50%-75% by 2030 (Source: International Energy Agency), by which time the world needs to
cut carbon-dioxide emissions by 30%. Limitations of wind, solar, geothermal, and hydro-power make
nuclear-power the only remaining viable option.
COMMENT: Taking the above factors into account, the increase in global demand for uranium could see the price of the metal continue to increase significantly. Over the past five months, the spot price of
U3O8 (see chart below)has spiked from US$40.25/lb to the current US$60.00/lb, a gain of 50%. Similarly, in the past two months, the shares of many uranium companies, both large and small, have appreciated
considerably.While some consolidation in the spot price may occur after the recent run-up, the burgeoning
global demand can only put continued upward pressure on uranium prices over the longer term.
Source: The Ux Consulting Company, LLC via Kitco Metals
8. The main project area of the Letlhakane uranium project is well serviced by local infrastructure, including
a major highway, secondary roads, railways, powerline, water pipeline, and the villages of Serule and
Gojwane, which provide much of A-Cap’s workforce. A-Cap’s main operational base is 70 km to the
north in Francistown (population approximately 100,000).
COMMENT: The presence of this infrastructure will have a major impact on keeping capital costs low while moving forward into development and production.
9. A-Cap possesses a diverse management team experienced in mineral exploration, project development
(particularly in Africa), metallurgy, equity financing, debt funding, and international negotiations. (See
Appendix 1, Page 16, for management and directors’ profiles.)
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 5
VALUATION
We valued A-Cap Resources Limited using the eResearch-derived Property Ratio Method, which focuses on
corporate comparisons using the following criteria:
Companies having properties that host similar mineralization characteristics;
Companies that are similar in terms of being at the same stage in the production cycle; and
Companies located in the same region or in regions that are geologically similar.
A-Cap’s peer group (described below) is comprised of four ASX-listed companies with the following
attributes
(1) Focused on uranium;
(2) Contain JORC-compliant uranium resources solely for projects in Africa, from which most of their value
is derived; and
(3) Committed to developing a uranium mine on the African continent.
Bannerman Resources Limited (“Bannerman”)
(TSX: BAN), (ASX: BMN), (NSX: BMN)
Bannerman is a junior uranium exploration and development company with two key properties in Namibia.
The 80%-owned Etango Project is Bannerman’s flagship asset and is located on a trend southwest of Rio
Tinto’s Rössing uranium mine and to the west of Paladin Energy’s Langer-Heinrich mine. A mineral resource
estimate on the Entango Project completed in October 2010 reported 212 million lbs U3O8 at a cut-off grade of
100ppm.
Deep Yellow Limited (“Deep Yellow”)
(ASX: DYL)
Deep Yellow is a pure uranium exploration company with properties in Namibia and Australia. In Namibia,
the company’s principal focus is its mid- to high-grade Reptile Project with a JORC-compliant resource
totaling 86 million lbs of U3O8. In Australia, the company is focused on defining its discoveries in the Mt. Isa
district of Queensland.
Marenica Energy Limited (“Marenica”)
(ASX: MEY)
Marenica Energy Limited is a junior uranium exploration and development company focused on its 75%-
owned Marenica Uranium Project in Namibia. The project contains an 85 million lbs U3O8 JORC-compliant
resource and covers 527 sq km, with good prospects for both secondary and primary uranium deposits. The
Company changed its name from West Australian Metals Ltd. in November 2009.
Extract Resources Limited (“Extract Resources”) (TSX: EXT), (ASX: EXT)
Extract Resources is an Australian-based uranium exploration company whose main asset is the Husab
Uranium Project, which contains the Rössing South and Ida Dome deposits. This project is rapidly developing
into a world-class uranium deposit and contains a JORC-compliant resource of 367 million lbs U3O8.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 6
Property Ratio Valuation Method
A-Cap Resources Limited is compared to the four peers in our Property Ratio table.
eResearch Approach eResearch’s method of property valuation takes into account the following:
The Book Value of the Mineral Properties is at the time of the latest financial statements, and the Market
Value is current;
The property value is adjusted for cash and cash equivalents of A$6,559,110, which after allowing for
working capital requirements, are assumed to be used for exploration purposes;
We estimate and assume capital expenditures of $6.2 million will be spent over the next 12 months by the
Company, and have adjusted the Book Value of the Mineral Properties accordingly.
Assuming 100% equity financing of capex, we estimate the amount of equity and the number of shares to
be issued, and adjust the equity per share of the Company accordingly (our estimate is 15.5 million shares
at A$0.40 per share, or $A6.2 million);
Our Property Ratio shows the premium attributed by the market to the Mineral Properties portfolio in
comparison to the Book Value of the Mineral Properties; and
The Selected Ratio we chose for the Company (see “Analysis of the Property Ratio” following) reflects
our expectation for the Company’s potential, after a careful analysis of the property, the expected drill
program, the potential of the property, and the timelines that the Company is expected to achieve over the
next 12 months.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 7
The Property Valuation Approach is based upon an analysis of the Property Ratio, which measures the
premium the market currently places on a company’s Mineral Properties. All else being equal, a higher
premium indicates the market is anticipating greater future value from the assets in the ground, while a lower
premium may represent an undervalued asset. Our analysis utilizes the latest available financial statements for
the respective companies.
Analysis of the Property Ratio
In the table on the previous page, we have estimated the value of A-Cap’s mineral property portfolio 12
months forward by adding the anticipated $6.2 million capital expenditures for the forecast period to the
existing mineral property value. Then we apply, to the Adjusted Book Value of the mineral property, the
selected Mineral Property Ratio, as determined by analyzing and comparing the relative merits of the peer
companies with the subject company.
A-Cap’s current Property Ratio of 2.81x is less than the average ratio of 6.68x for its peers.
The average ratio is significantly influenced by Extract Resources, which experienced a sharp price
appreciation over the last couple of years, rising from the $1.00 range to over $11.00 per share, and now
trading at $9.25. The increase reflects the good drilling results over the two years at the company’s Husab
Uranium Project.
Shown below is a table indicating the intrinsic value over the next 12 months for A-Cap at Property Ratio
levels ranging between 2.00x and 8.00x.
A-Cap Ventures Property Ratio Intrinsic Value
Current Book Value 1.00x A$ 0.14
Current Property Ratio 2.67x A$ 0.42
Property Ratio: Next 12 Months 2.00x A$ 0.31
Property Ratio: Next 12 Months 3.00x A$ 0.47
Property Ratio: Next 12 Months 4.00x A$ 0.62
Property Ratio: Next 12 Months 5.00x A$ 0.78
Property Ratio: Next 12 Months 6.00x A$ 0.93
Property Ratio: Next 12 Months 7.00x A$ 1.08
Property Ratio: Next 12 Months 8.00x A$ 1.24 Source: eResearch
We are choosing a ratio of 5.00x as the most appropriate for A-Cap at the present time, based on:
(1) It is lower than the average of 6.68x for the four companies, an average that is skewed by one company
having a ratio much higher than the others;
(2) The completion of a positive feasibility study and the expectation of commencing production in late 2012
to early 2013 should have a significant impact on the share price; and
(3) A-Cap contains a larger resource than two of its four peer comparables;
At the Selected Ratio of 5.00x, the intrinsic value of A-Cap Resource Limited is $0.78 per share.
Conclusion
Based on the Property Ratio valuation methodology and the derivation of the intrinsic value, as shown above,
we are maintaining our 12-months’ Target Price at A$0.80 per share.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 8
FINANCIAL REVIEW & OUTLOOK
Financial Year End
June 30
Revenues
The Company currently generates no revenues. A-Cap will report losses for the next couple of years until it is
able to bring its Letlhakane uranium project into production.
Cash Burn Rate
The operating expenses and cash burn rate for fiscal 2010 significantly decreased over the prior year due to a
decrease in Employment and Consultancy fees. We expect these fees to increase for the upcoming year due to
the fees associated with the Bankable Feasibility Study that commenced in August 2009.
We estimate the average monthly cash burn rate to be A$245,000 for 2010 compared to A$172,000 in 2009.
Cash and Marketable Securities
At June 30, 2010, A-Cap had A$6,559,110 in cash. Based on the Company’s operating and capital spending to
date, we estimate current cash resources to be approximately A$5.4 million.
Cash at June 30, 2010 A$6.6M
Burn rate (for 5 months) (A$1.2M)
Cash at November 30, 2010 A$5.4M
Capital Expenditures for Exploration
Capital expenditures (“capex”) increased to A$6.2 million for the fiscal year ending June 30, 2010 compared
to A$3.8 million in fiscal 2009. The increase was due to the commencement of the Bankable Feasibility Study
and ongoing exploration at Serule and Gorgon South. For the upcoming year, we estimate capex to be A$6.2
million, as outlined below.
BFS consultants A$2.0M
Resource upgrade drilling A$1.0M
Metallurgical test-work A$1.2M
Direct BFS expenditure A$4.2M
Ongoing exploration A$2.0M
Total capital expenditures A$6.2M
Financing
As at July 1, 2010, A-Cap had A$6.6 million in cash. We project the Company’s capex to be A$6.2 million to
carry out its ongoing Bankable Feasibility Study and planned exploration program during the current year
ending June 30, 2011. Since the Company’s cash position is just sufficient to meet projected capex, we expect
the Company will try to complete an equity financing during the year. Our estimate is A$6.2 million, being
15.5 million shares at A$0.40 per share.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 9
SELECTED FINANCIAL INFORMATION
A$ Year Ending Year Ending Year Ending Year Ending
June 30 2008 June 30 2009 June 30 2010 June 30 2011E
Statement of Income/(Loss):
Operating Income - - - -
Non-Operating Income 833,784 368,013 380,655 400,000
General & Administrative Expense (1,893,209) (3,668,403) (2,064,252) (2,950,000)
Non-cash items adjustments (279,294) - (13,873) -
Net Income/(Loss) (1,338,719) (3,300,390) (1,697,470) (2,550,000)
Total Shares Outstanding 110,095,078 126,245,078 161,845,078 177,345,078
Weighted Average Shares Outstanding 110,095,078 112,504,530 161,120,146 169,595,078
Earnings (Loss) Per Share ($0.01) ($0.03) ($0.01) ($0.02)
Statement of Cash Flow:
Net Income (Loss) (1,338,719) (3,300,390) (1,697,470) (2,550,000)
All Non-Cash Items 569,763 2,285,895 173,635 1,000,000
Cash Flow from Operations (768,956) (1,014,495) (1,523,835) (1,550,000)
Capital Expenditures (Properties) (5,596,512) (3,750,549) (6,234,959) (6,200,000)
Other Investing Items (806,777) 835,690 56,684 200,000
Free Cash Flow (7,172,245) (3,929,354) (7,702,110) (7,550,000)
Working Capital Changes (66,396) 479,450 (321,972) (1,200,000)
Equity Financing (22,374) 2,700,500 7,298,106 6,200,000
Change in Cash (7,261,015) (749,404) (725,976) (2,550,000)
Cash, Beginning of the Period 15,295,505 8,034,490 7,285,086 6,559,110
Cash, End of the Period 8,034,490 7,285,086 6,559,110 4,009,110
As at As at As at As at
June 30 2008 June 30 2009 June 30 2010 June 30 2011E
Balance Sheet:
Cash 8,034,490 7,285,086 6,559,110 4,009,110
Other Current Assets 1,035,224 196,934 194,222 194,222
Mining Properties 6,010,527 10,211,230 15,888,044 22,088,044
Other Assets 387,718 373,823 417,648 417,648
Total Assets 15,467,959 18,067,073 23,059,024 26,709,024
Current Liabilities 613,250 1,090,100 941,488 941,488
Total Liabilities 613,250 1,090,100 941,488 941,488
Shareholders' Equity 14,854,709 16,976,973 22,117,536 25,767,536
Total Liabilities & Equity 15,467,959 18,067,073 23,059,024 26,709,024
Book Value (S.E.) Per Share $0.13 $0.13 $0.14 $0.15
COMMENT: The completion of a positive feasibility study and a decision to start production at Letlhakane should result in a significant change in the financial statements by fiscal 2012.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 10
PROPERTIES
A. PROJECT LOCATIONS
The map below shows the location of A-Cap's tenement holdings across Botswana.
(1) Letlhakane: The Letlhakane uranium project is circled in red.
(2) Southern Pans: The seven property licenses shown in blue in the centre of the map (above Orapa) are the
Company’s Southern Pans Project.
(3) Northwest Project: In the top left corner of the map is A-Cap’s Northwest Project. Since the Company
did not submit a renewal application for the two licenses in September 2010, as required, we assume the
Company will lose, or has lost, these licenses.
Source: Company
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 11
B. LETLHAKANE URANIUM PROJECT
The Letlhakane Uranium Project, comprised of 3 Prospecting Licenses (PL’s 45/2004, 138/2004, and
125/2009) in eastern Botswana, is A-Cap’s flagship project.
There are three main project areas: (1) Gojwane Resource; (2) Serule West Resource; and (3) Serule East.
All three project areas lie within the Letlhakane prospecting license (PL45/2004), and are well serviced by
local infrastructure, including a major highway, secondary roads, railways, powerline, water pipeline, and the
villages of Serule and Gojwane, which provide much of A-Cap’s workforce. A-Cap’s main operational base is
70 km to the north in Francistown (population approximately 100,000). See Map next page.
The main Mokobaesi deposit within the Letlhakane Uranium Project is Mokobaesi, which lies in the Gojwane
Resource, and which also encompasses the Gorgon, Gorgon West, Gorgon South, and Kraken prospects.
Source: Company
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eResearch Corporation 12
Three significant ore types occur in the Letlhakane deposit:
i. Secondary Ore – occurs within 15 metres of the surface and characterized by carnotite, a yellow
radioactive material, as the main ore mineral. Secondary ore often contains significant amounts of
carbonate which gradually decreases with depth.
ii. Oxide Ore – occurs between 10 and 25 metres from the surface and has been affected by weathering and
oxidation. Some oxide ores are strongly oxidized and some are weakly oxidized and are mineralogically
similar to primary ore.
iii. Primary Ore – occurs below 25 metres from the surface and represent 67% of the total ore resource of the
Letlhakane uranium project. Primary ores are not affected by weathering and oxidation.
Source: Company
1. Scoping Study (2008)
A scoping study on the Letlhakane uranium project deposit was released in October 2008. The main findings
of the scoping study include:
At a cut-off grade of 100 ppm, an Inferred Resource was estimated at 280 million tonnes of ore at a grade
of 158 ppm of U3O8, for a contained 44,500 tonnes of U3O8 (98 million lbs of U3O8). Compared to the
previous resource estimate, the figures represent a 330% increase in tonnes and a 13% increase in grade,
leading to an increase in contained metal at the same 100-ppm cut-off. (The resource estimate has been
updated yet again, to 158 million lbs U3O8: see COMMENT below, and Optiro on page 14.)
Because of low recoveries for primary ore, the scoping study only considered oxide and calcrete ore
sources which had recoveries between 78% and 90%.
Total cash costs of US$33/lb U3O8.
Total capital expenditures of US$179 million, which includes US$10 million of sustaining capital
COMMENT: In November 2009, Optiro updated the resource estimate as part of a BFS currently underway. This update takes the resource to 158 million lbs from the previously stated 98 million lbs, an increase of 59%.
COMMENT: The Company plans to bring the Letlhakane mine into production by 2013.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 13
2. Environmental Impact Assessment
The Company initiated an Environmental Impact Assessment of the Letlhakane project in late January 2009.
The EIA process is being managed by Metago Environmental Engineers. As part of the EIA, public
participation and information meetings have been held in local villages and also a further meeting with local
government officials. To date, no objections have been received from the communities. The Map below shows
the 7x10km area covered by the EIA study and the potential infrastructure layout.
Source: Company
3. Bankable Feasibility Study
The Company also announced that it had appointed Lycopodium Minerals Pty. Ltd. as manager of a Bankable
Feasibility Study for the Letlhakane uranium project. The start date for the study was August 2009. The BFS
study is expected to take one year, and will have two stages: (1) metallurgical testwork and process design (32
weeks), and (2) engineering and costing phase (20 weeks). Delivery of the BFS is anticipated in late 2011.
The budget is A$6.5 million, and includes significant resource drilling and metallurgy studies.
A-Cap has also appointed Ian Glacken of Optiro Mining Optimisation Consultants to perform mineral resource
modelling at the Letlhakane project (see next page).
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4. Optiro Updated Resource Estimate
Optiro Pty. Ltd. updated the Mineral Resource estimate for Letlhakane in November 2009 to 158 million lbs of
U3O8 with a cut-off grade of 100 ppm.
In the update, Optiro included a new resource estimate at the Serule West Resource of 42 million lbs of U3O8
in the Inferred category at a cut-off grade of 100 ppm.
The Mineral Estimate for Gojwane and Serule West at 100ppm U3O8 cut-off grade is shown below:
Project Mt U3O8 ppm U3O8 Mlbs Mt U3O8 ppm U3O8 Mlbs Mt U3O8 ppm U3O8 Mlbs
Gojwane 143.1 159 50.2 201.0 148 65.5 344.1 152 115.7
Serule West - - - 119.5 160 42.1 119.5 160 42.1
Global Total 143.1 159 50.2 320.5 152 107.6 463.6 154 157.8
Note: The Global Total U3O8 ppm is a weighted average for Gojwane and Serule West.
Indicated Inferred Total
5. Drilling Focus
The focus of exploration drilling is now to close the gap between the two defined resource areas (Gojwane and
Serule West) through a 400m x 400m spacing drill pattern. In addition, the Company will perform drilling to
extend known mineralization at Gorgon West and Serule East not included in current resource estimates.
COMMENT: The planned exploration and drilling program has the potential to double the resource from the current size to more than 300 Mlbs.
A-Cap Resources Limited Update Report ______________________________________________________________________________
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C. SOUTHERN PANS PROJECT
The Southern Pans Project, comprised of 7 Prospecting Licenses (PL’s 71/2008, 72/2008, 73/2008, 74/2008,
134/2005, 135/2005, 122/2009), is located in north-central Botswana and covers over 3000 km2. A-Cap has
appointed GeX Surveys to undertake an airborne survey over Prospecting Licenses 71/2008, 72/2008, 73/2008,
and 74/2008, all of which have never been explored for uranium.
Source: Company
D. NORTHWEST PROJECT
The Northwest Project covers 1,359 km2 of property and is comprised of 2 Prospecting Licenses, North Uray
(PL 136/2005) and South Uray (PL137/2005). In the 1970s, Union Carbide collected grab samples with
grades of up to 1,328 ppm U3O8. A-Cap completed a prospectivity study on these PL’s and several follow-up
targets were defined. Renewal applications for these licences, due in September 2010, were not submitted. By
that, we assume the Company is no longer interested in this project.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 16
APPENDIX 1: MANAGEMENT AND DIRECTORS
Robert James Pett, BA (Hons), MA (Econ), FAICD, Chairman, Director Mr. Prett was appointed Chairman and Director upon the resignation of Patrick John Volpe on January 12,
2010. He is a minerals economist with more than 27 years’ experience in exploration and mining, during
which he oversaw the successful exploration, development, operation, and financing of more than ten mining
projects worldwide. This included gold and nickel mines in Australia and gold mines in east and west Africa,
from grass roots discovery to numerous exploration projects. He is currently a Director of Australian Stock
Exchange-listed companies Victoria Petroleum N.L. and Ausgold Limited. He holds a Masters Degree from
Queens University, Kingston, Ontario, Canada.
Andrew Tunks, PhD (Tasmania), MAIG, Geologist, CEO, Director
Dr. Tunks is a geologist and Managing Director of A-Cap. He was Chief Geologist at IAMGold and is
responsible for managing A-Cap’s exploration portfolio. He has considerable experience in the mining
industry, both in Australia and in southern and central Africa, having worked for Paladin Resources, Ranger
Minerals, and others. A member of the Australian Institute of Geoscientists (AIG) and a recent member of the
AIG Council, Dr. Tunks has also lectured at the University of Tasmania and is the author of several
publications. He holds a BSc (Hons) degree from Monash University in Victoria, and a PhD from the
University of Tasmania.
Henry James Stacpoole, Director
Mr. Stacpoole is a director of Botswana Metals Limited and a managing director of Stacpoole Enterprises Pty.
Ltd., a Launceston, Tasmania-based company involved in civil contracting, drilling, and mining exploration.
He has significant experience in developing mining projects. A founding director of Beaconsfield Gold Mines
Ltd. in 1987, he was instrumental in the development of the Beaconsfield gold mine in Tasmania, and became
Chairman of the restructured Beaconsfield Gold N.L. in 1992. A member of numerous Tasmanian Government
Overseas Trade Missions and director, life member, and past president of the Tasmanian Minerals Council,
Mr. Stacpoole has considerable mining industry knowledge, both in Australia and at the international level.
Paul Woolrich, Director Dr. Woolrich is also a director of Botswana Metals Limited. He has over 35 years’ experience in the
international exploration and mining industry focused on gold, base metals, and PGEs. He has spent the last
20 years in senior management positions with Western Mining Corporation, Ranger Minerals Ltd, Orion
Resources, Gallery Gold, and Platmin Ltd. From 2004 to 2006, as Project Manager, he was in charge of the
feasibility study of Platmin’s Pilanesberg PGE Project in South Africa. Dr Woolrich is managing A-Cap’s
Bankable Feasibility Study regarding the viability of the Letlhakane uranium project. He holds a BSc (Hons)
degree in geology, an MSc in geochemistry, and a PhD in metallurgy.
Paul Anthony Ingram, Director
Mr. Ingram is also a director of Impact Minerals Limited. He was appointed non-executive director on June 1,
2009. Mr. Ingram has spent over 30 years in the mining industry. He is a geologist with experience in
managing mineral exploration programs for several publicly-listed companies. He has designed and
implemented innovative techniques for exploration in remote areas and has managed projects in countries
throughout East Asia and in Australia. He holds a Bachelor of Applied Science degree in geology.
Denis Rakich, Company Secretary
Mr. Rakich is an accountant with experience in the mineral production and exploration industries. He is
responsible for the legal, financial, and corporate management of A-Cap Resources Ltd. He is a fellow of the
CPA Australia, and serves as Company Secretary for other companies within the resources sector.
Penny Large, Chief Geologist Ms. Large has held positions with Acacia Exploration, Anglo Ashanti Gold, and Placer Dome. She holds a
BSc (Hons) from the University of Tasmania.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 17
APPENDIX 2: SHAREHOLDER INFORMATION
Below is a list containing A-Cap’s twenty largest equity shareholders, as at September 15, 2010:
Percentage of
Security Holder Issued Shares
China Growth Minerals Limited 16.07%
Vermar Pty Ltd 6.87%
Bond Street Custodians Limited 3.62%
Polarity B Pty Ltd 2.75%
BLW (VIC) Pty Ltd 2.35%
Methuselah Capital Management Pty Limited 2.22%
ANZ Nominees Limited 2.19%
J P Morgan Nominees Australia Limited 1.87%
Merriwee Pty Ltd 1.36%
HSBC Custody Nominees (Australia) Limited 1.29%
Citicorp Nominees Pty Limited 1.21%
Amarant Holdings Pty Ltd 1.20%
Mr H Stacpoole 1.20%
Riotek Pty Ltd 1.13%
Claric 182 Pty Ltd 0.94%
Thornton (NSW) Pty Ltd 0.77%
Dreamlight Nominees Pty Ltd 0.72%
Ekco Investments Pty Ltd 0.70%
Baystreet Pty Ltd 0.65%
Mr Julian Lewis Wright 0.62%
Total 49.73% Source: Company
APPENDIX 3: CORPORATE INFORMATION A-Cap Resources Limited Suite 5.10,
Level 5, Pacific Tower
737 Burwood Rd
Hawthorn Vic 3122
Australia
Telephone: +61 (3) 9813 5888
Facsimile: +61 3 9813 2668
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 18
APPENDIX 4: STOCK CHARTS
1. Three-Year Chart
The elongated “U”, from mid-2008 until mid-2009, has turned into a “cup” with a very long “handle”. The
shares continue to back off resistance at A$0.50, and remain essentially range-bound between A$0.30 and
A$0.50. Once the resistance point is breached, the next resistance point is up at our Target Price at A$0.80.
2. Three-Month Chart
The stock has been rising since late October, on increasing volume, from A$0.30, and has levelled off in the
A$0.40 - A$0.45 range. It seems to be gearing up to take a run at the A$0.50 resistance point.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 19
ANALYST CERTIFICATION
Each Research Analyst who was involved in the preparation of this Research Report hereby certifies that:
(1) the views, opinions, and recommendations expressed in this Research Report reflect accurately the Research
Analyst’s personal views concerning any and all securities and issuers that are discussed herein and are the
subject matter of this Research Report; and
(2) the fees, earnings, or compensation, in any form, payable to the Research Analyst, is not and will not, directly or
indirectly, be related to the specific views, opinions, and recommendations expressed by the Research Analyst in
this Research Report.
eResearch analysts on this report:
Shash Patel, B.Sc. (Act. Sc.), MBA – Shash Patel has been involved with investment research for more than seven
years, as a securities analyst and trader, and as a pension and benefits specialist. He joined eResearch in September
2009.
Bob Weir, B. Comm, B.Sc., CFA – Bob Weir has 44 years of investment research and analytical experience in both
the equity and fixed-income sectors, and in the commercial real estate industry. He was at Dominion Bond Rating
Service (DBRS) from 1994 to 2001, latterly as Executive Vice-President responsible for supervising the firm’s 34
analysts and conducting the day-to-day management affairs of the company. He joined eResearch in 2004 and has
been its President, CEO, and Managing Director, Research Services since May 2005.
Analyst Affirmation: I, Shash Patel, and I, Bob Weir, hereby state that, at the time of issuance of this research
report, I do not own, directly or indirectly, any shares of A-Cap Resources Limited.
eRESEARCH ANALYST GROUP
Managing Director, Research Services: Bob Weir, CFA
Financial Services Robin Cornwell
Biotechnology/Health Care
Scott Davidson
Mark Mitchell
Transportation Services,
Environmental Services,
and Industrial Products
Bill Campbell
Oil & Gas Eugene Bukoveczky
Achille Desmarais
Eric Eng
Special Situations Bill Campbell
Mark Edwards
Bob Leshchyshen
Shash Patel
Perry Siu
Mining & Metals Eric Eng
Kirsten Marion
Shash Patel
Mining Advisors George Cargill
Graham Wilson
eResearch Disclaimer: In keeping with the policies of eResearch concerning its strict independence, all of the
opinions expressed in this report, including the selection of the 12-month Target Price and the Recommendation
(Buy-Hold-Sell) for the Company’s shares, are strictly those of eResearch, and are free from any influence or interference from any person or persons at the Company. In the preparation of a research report, it is the policy of
eResearch to send a draft copy of the report, without divulging the Target Price or Recommendation or any reference
to either in the text of the report, to the Company and to any third party that paid for the report to be written. Comments from Company management are restricted to correcting factual errors, and ensuring that there are no
misrepresentations or confidential, non-public information contained in the report. eResearch, in its sole discretion,
judges whether to include in its final report any of the suggestions made on its draft report.
A-Cap Resources Limited Update Report ______________________________________________________________________________
eResearch Corporation 20
eResearch Recommendation System
Strong Buy: Expected total return within the next 12 months is at least 40%.
Buy: Expected total return within the next 12 months is between 10% and 40%.
Speculative Buy: Expected total return within the next 12 months is substantial, but Risk is High (see below).
Hold: Expected total return within the next 12 months is between 0% and 10%.
Sell: Expected total return within the next 12 months is negative.
_____________________________________________________________________________________________________________
eResearch Risk Rating System
A company may have some, but not necessarily all, of the following characteristics of a specific risk rating to qualify for that rating:
High Risk: Financial - Little or no revenue and earnings, limited financial history, weak balance sheet, negative free cash flows, poor
working capital solvency, no dividends.
Operational - Weak competitive market position, early stage of development, unproven operating plan, high cost
structure, industry consolidating, business model/technology unproven or out-of-date.
Medium Risk: Financial - Several years of revenue and positive earnings, balance sheet in line with industry average, positive free
cash flow, adequate working capital solvency, may or may not pay a dividend.
Operational - Competitive market position and cost structure, industry stable, business model/technology is well
established and consistent with current state of industry.
Low Risk: Financial - Strong revenue growth and earnings over several years, stronger than average balance sheet, strong positive
free cash flows, above average working capital solvency, company may pay (and stock may yield) substantial dividends
or company may actively buy back stock.
Operational - Dominant player in its market, below average cost structure, company may be a consolidator, company may
have a leading market/technology position.
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eResearch accepts fees from the companies it researches (the “Covered Companies”), and from financial institutions or other third parties. The
purpose of this policy is to defray the cost of researching small and medium capitalization stocks which otherwise receive little or no research
coverage.
A-Cap Resources Limited paid eResearch a fee of US$35,000 to conduct research on the Company on an Annual Continual Basis.
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allowed to trade in shares, warrants, convertible securities or options of any of the Covered Companies under identical restrictions.
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